- the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”);
- the amount of salary paid must meet a minimum specified amount (the “salary level test”); and
- the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”).
- employees of companies with annual revenues (according to gross volume of sales made or business done) of less than $500,000 and which are not involved in interstate commerce;
- military personnel;
- unpaid volunteers;
- self-employed individuals;
- clergy/religious workers; and
- non-profits except to the extent that they are engaged in ordinary commercial activities.
- reduce the hours of salaried employees whose salaries are below the new “salary level requirement” such that these employees do not work more than forty (40) hours per week;
- increase the compensation of any salaried worker currently making less than $35,568 annually;
- reclassify Executive, Administrative, and Professional employees making less than $35,568 as non-exempt;
- increase the hours of part time employees so that full time employees need not work more than forty (40) hrs./wk.; or
- reduce the base compensation of employees such that overall level of compensation (after payment of overtime) remains the same.
CIRCULAR 230 DISCLOSURE – Pursuant to rules and regulations imposed by the Internal Revenue Service, any tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding tax penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another person any transaction or matter addressed herein.
The summary which appears above is reprinted for information purposes only. It is not intended to be and should not be considered legal advice nor substitute for obtaining legal advice from competent, independent, legal counsel. If you would like to discuss these matters in more detail, please feel free to contact us so that we can provide the clarification and resources you need to make effective decisions.